Should Startup Employees Have Health Insurance?

Andrew Wang
|
March 11, 2015

Benefits are an important part of your employees' compensation
package, and healthcare is one of the top benefits you can offer. Employers
often have to seriously consider whether healthcare is a benefit they should
provide. Even if the answer is yes, it is difficult and costly to
implement depending on where your startup and employees are based right
now.

On this map you can see the countries marked in green that provide
universal healthcare - the U.S isn’t one of them. Considering the expensive
and difficult system, it probably comes as no surprise that the U.S.
healthcare system is
consistently poorly rated when compared to healthcare systems in other
developed countries.

Larger companies in the U.S. are mandated to provide health insurance by law
- the requirement applies to firms that employ 50 or more full-time
employees. These costs, which can vary,
are estimated to be around $200-300 per month per employee, depending on
how much the employer wishes to subsidize. Because healthcare expenditures
are increasing by around 15-20% year over year, many larger companies are
choosing to cut down on the amount of coverage they are subsidizing.

Back to the original question: should your startup be making sure that your
employees have health insurance? We believe so - Teleport strongly supports
the idea that everyone should have access to solid baseline healthcare, and
taking care of that issue is a good way to show your employees they’re
appreciated. There are also several potential benefits for the employer -
there’s plenty of
research on health coverage helping employers recruit and retain
high-quality workers and contributing to productivity by reducing the costs
of absenteeism and turnover.

Also, even though smaller startups (those with fewer than 50 full
time-employees) are technically exempt from the aforementioned U.S. employer
mandate of having to provide insurance, they have the disadvantage of having
to constantly compete for and win over talent against the bigger players, so
many startups really cannot and should not afford to skimp on this particular
“perk”. Forbes estimates that
65% of all startups with 16-50 employees provide healthcare insurance.

So, you’ve decided to provide healthcare benefits to your startup employees.
What can you do to make it as painless as possible? One solution to this
expensive problem would be to “diversify” your startup locations, and spend
less time in countries where the healthcare system is broken. In countries
where the system is not broken,
the national government provides complete coverage, and the company is not
involved at all. Most of these countries do this through compulsory but
government-subsidized public insurance plans, such as the UK's National
Health Service.

Another solution would be to provide some sort of international insurance,
for example Cigna, Integra Global or Bupa - these plans have various different
conditions so make sure you know for sure that the international health plan
you end up choosing really suits your needs as well as your employees’.
Lastly, you can simply choose to relocate your startup altogether, and move
it to a country with
lower healthcare costs.

As we’re building out Teleport’s data coverage for startup hubs around the
world, we are including information on both the cost and the quality of
healthcare to ensure that you are always able to make informed decisions
about these issues with ease.

We’ll be launching a global search product specifically for startups very
soon - you can get all the important updates and latest news before anyone
else by signing up to the Teleport newsletterhere.